Towards a Theory of Digital Network De/centralization: Platform-Infrastructure Lessons Drawn from Blockchain by Enrico Rossi, Carsten Sørensen :: SSRN

Global digital platforms are conquering the world and rely critically on digital infrastructures to function, yet little research has explored the fundamental interrelationship between the two. This working paper argues that understanding centralization and decentralization in digital networks as asymmetry and symmetry in mutual interdependencies between the constitutive elements of a digital network can help us understand the platform-infrastructure relationship more fundamentally (and vice versa). To this end, the paper proposes, as a starting point, the in-depth analytical and literature study of blockchain networks as a particularly revealing type of digital platform/infrastructure duality. The paper proposes an analytical model for characterizing de/centralization in digital networks and maps this onto blockchain networks. Based on this, the paper explores the de/centralization of blockchain, arguing that the extant blockchain literature largely has failed in providing a comprehensive understanding of de/centralization by not considering the complex second-order interdependencies between the different constitutive dimensions of a blockchain: the symbolic, technological and political dimension. Based on this, the paper provides an analysis of the meaning of de/centralization in blockchain networks by studying the interdependencies between its constitutive elements of coin, network technology, and social community.

Source: Towards a Theory of Digital Network De/centralization: Platform-Infrastructure Lessons Drawn from Blockchain by Enrico Rossi, Carsten Sørensen :: SSRN

Obfuscation in Bitcoin: Techniques and Politics – Workshop on Obfuscation

Bitcoin and its users employ a variety of obfuscation techniques to increase their financial privacy. We visualize a representative selection of these techniques in Figure 1 based on their time of invention/creation and our assessment of their similarity to obfuscation vs. cryptography. We make several observations. First, techniques used in Bitcoin predominantly fall into obfuscation, with stronger techniques being used exclusively in alternative cryptocurrencies (altcoins). Second, there is a trend towards stronger techniques over time, perhaps due to a growing interest in privacy and to the greater difficulty of developing cryptographic techniques. Third, obfuscation techniques proposed at later points in time are seeing less adoption, arguably a result of their increased complexity and need for coordination among participants (Möser & Böhme 2017).

Source: Obfuscation in Bitcoin: Techniques and Politics – Workshop on Obfuscation

Q3 2019 Cryptocurrency Anti-Money Laundering Report – CipherTrace

First, the third quarter saw growing awareness of perhaps the biggest clampdown on virtual asset transactions to ever impact crypto exchanges as well as banks and other financial institutions. After months to absorb its implications, these businesses are coming to grips with the fact that in just seven months they will need to comply with the so-called FATF funds Travel Rule. In a major challenge to business models and user privacy, among other changes this rule requires virtual asset service providers (VASPs) to securely transmit (and store) sender and receiver information whenever cryptocurrency moves. At the same time, US regulators emphasized that a similar Travel Rule which has long applied to fiat funds transfers—also applies to cryptocurrency transactions. This has left firms struggling to find a technical solution in time to avoid potentially severe penalties or blacklisting. It will no doubt have implications as regulators seek to have KYC information shared globally.The Blockchain Security Company

Source: Q3 2019 Cryptocurrency Anti-Money Laundering Report – CipherTrace

Brave New Coin

  • Earning interest on crypto asset holdings has become easier than ever, thanks to the Compound protocol and DApps like Dharma and Celsius.
  • Converting your ETH to other Ethereum tokens can be done securely and privately decentralized exchanges such as Uniswap or IDEX.
  • Hedging your cryptographic asset portfolio is now possible thanks to decentralized derivatives trading platforms, such as dYdX.
  • Insuring yourself against the failure of smart contracts has become possible thanks to Nexus Mutual.
  • Betting on the outcome of elections, sporting events or whether John McAfee’s bitcoin price prediction will come true can be done on prediction markets platforms, such as Augur.
  • Storing funds in crypto-backed stablecoins during times of extreme market volatility is now as easy as buying DAI.

DSHR’s Blog: Bitcoin’s Lightning Network

Discussions of cryptocurrencies and other blockchain technologies are bedeviled by a nearly universal assumption that attributes that are possible to achieve in theory are guaranteed to be realized in practice. Examples include decentralization and anonymity.Back in June David Gerard asked: How good a business is running a Lightning Network node? LNBig provides 49.6% ($3.7 million in bitcoins) of the Lightning Network’s total channel liquidity funding — that just sits there, locked in the channels until they’re closed. They see 300 transactions a day, for total earnings on that $3.7 million of … $20 a month. They also spent $1000 in channel-opening fees.Even if the Lightning Network worked (which it doesn’t), and were decentralized (which it isn’t), Gerard’s point was that the transaction fees were woefully inadequate to cover the costs of running a node. Now, A Cryptoeconomic Traffic Analysis of Bitcoin’s Lightning Network by the Hungarian team of Ferenc Béres, István A. Seres, and András A. Benczúr supports Gerard’s conclusion with a detailed analysis.

Source: DSHR’s Blog: Bitcoin’s Lightning Network

Airbnb Claims Its AI Can Predict Whether Guests Are Psychopaths – Slashdot

To protect its hosts, Airbnb is now using an AI-powered tool to scan the internet for clues that a guest might not be a reliable customer. According to patent documents reviewed by the Evening Standard, the tool takes into account everything from a user’s criminal record to their social media posts to rate their likelihood of exhibiting “untrustworthy” traits — including narcissism, Machiavellianism, and even psychopathy. The background check tool is the work of Trooly, a startup Airbnb acquired in 2017. When the Evening Standard asked Airbnb to comment on the extent to which it uses Trooly’s tool, it declined. However, Airbnb’s website does note the company’s use of AI to rate potential guests: “Every Airbnb reservation is scored for risk before it’s confirmed. We use predictive analytics and machine learning to instantly evaluate hundreds of signals that help us flag and investigate suspicious activity before it happens.”

Source: Airbnb Claims Its AI Can Predict Whether Guests Are Psychopaths – Slashdot

Cloud Crypto Land by Edmund-Philipp Schuster :: SSRN

The supposed disruptive and transformational potential of blockchain or distributed ledger technology (DLT) has received widespread attention in the media, from legislators, as well as from academics across disciplines, including law, over the past few years. While much of this attention revolved around the cryptocurrency Bitcoin (and its numerous cryptocurrency offshoots), many see the real promise of blockchain technology in its potential use for organising transactions in real assets, including shares and other securities, as well as for facilitating self-executing “smart contracts”, which replace vague and imprecise natural language with precise and unambiguous computer code.

Focussing mainly on non-currency applications of blockchain technology, I present a simple legal argument that seeks to demonstrate the impossibility of a meaningful blockchain-based economic system. I argue that features present in all major legal systems mean that real assets cannot be traded on blockchain-based systems, unless design choices are made which necessarily remove all advantages the technology offers over existing solutions. The same argument is shown to apply to so-called smart contracts.

The paper further argues that there is no reason to expect legislators to change current legal principles in sufficiently dramatic fashion so as to carve out a space in which (non-currency) applications of blockchain technology can usefully be implemented, since the oft-promised potential efficiency gains supposedly stemming from the adoption of the blockchain technology are based on a flawed analysis of costs and benefits. Legal and practical obstacles therefore mean that, outside its original and circumscribed realm of cryptocurrency, blockchain technology is highly unlikely to transform economic interactions in the real world. Instead, it is argued that – depending on the specific implementation – blockchain technology is either pointless or useless for transactions in traditional assets.

Keywords: Blockchain, distributed ledger technology, smart contracts, crypto assets, cryptoassets, Ethereum, Bitcoin, DLT

Source: Cloud Crypto Land by Edmund-Philipp Schuster :: SSRN

Some Uber drivers use bogus identities and shared accounts – CNET

Uber faced a blow on Monday when London regulators refused to renew the ride-hailing company’s operating permit because of safety concerns. The biggest issue lawmakers cited was drivers using false identities as they ferried unsuspecting passengers.At least 14,000 trips were made by unauthorized drivers, according to city regulator Transport for London. The way it worked is this: A number of drivers would share one account, and whenever one of them went out to drive, they’d upload their own photo to fool passengers. The unauthorized drivers were able to pose as vetted, licensed and insured, when often they weren’t.

Source: Some Uber drivers use bogus identities and shared accounts – CNET

HSBC swaps paper records for blockchain to track $20 billion worth of assets – Reuters

HSBC aims to shift $20 billion worth of assets to a new blockchain-based custody platform by March, in one of the biggest deployments yet of the widely-hyped but still unproven technology by a global bank.

The platform, known as Digital Vault, will give investors real-time access to records of securities bought on private markets, HSBC (HSBA.L) told Reuters, and seeks to capitalize on booming interest in such investments by yield-hungry investors.

Source: HSBC swaps paper records for blockchain to track $20 billion worth of assets – Reuters